1. Common Causes of Health Insurance Claim Rejections

According to data from IRDAI’s Annual Report 2021-22, claim rejection rates in health insurance were around 5.5%, with individual policy rejections often higher than group policies due to stringent scrutiny. The following are the primary reasons for these rejections:

• Incomplete or Incorrect Documentation: Claims are often denied due to missing or incorrect documentation. This includes incomplete medical reports, invalid receipts, or missing pre-authorization forms for cashless claims.

• Non-disclosure of Pre-existing Conditions: Failure to disclose pre-existing medical conditions or treatments at the time of policy purchase is one of the leading reasons for claim rejections. Many policies have specific waiting periods for pre-existing conditions.

• Excluded Treatments: Claims made for treatments that fall under policy exclusions are regularly denied. These exclusions could include cosmetic surgeries, infertility treatments, or dental procedures unless specifically covered by the policy.

• Expired or Lapsed Policy: If the policyholder has not paid the premium on time or the policy has expired, claims made during this period will be rejected. It is crucial to ensure that the policy remains active.

• Waiting Period Clause: Most health insurance policies impose a waiting period for specific diseases, surgeries, or pre-existing conditions, typically ranging from 1 to 4 years. Claims made within this waiting period are often rejected.

• Hospitalization Below the Minimum Time: Many policies require a minimum duration of 24 hours of hospitalization for claim eligibility. Daycare treatments or shorter hospital stays that are not explicitly covered under policy terms may result in denial.

• Non-recognition of Hospital: If treatment is received from a hospital that is not part of the insurer's network or does not meet the insurer’s criteria (such as required accreditation), the claim could be rejected.

2. Regulatory Guidelines to Prevent Unjust Claim Denial

In light of growing consumer concerns, the Insurance Regulatory and Development Authority of India (IRDAI) issued the Master Circular on Protection of Policyholders’ Interests (2024) and the Master Circular on Health Insurance Business (2024) to safeguard policyholders from unfair claim practices.

Key Regulatory Guidelines:

• Timely Processing of Claims: As per the Master Circular on Policyholders' Interests, health insurers are required to settle claims within 15 days from the date of receiving all necessary documentation.

• Standardized Policy Terms: The Master Circular on Health Insurance Business (2024) mandates that health insurers use standardized and clearly defined terms and exclusions, reducing ambiguity and ensuring that policyholders are fully aware of what is covered under their policy.

• Pre-authorization for Cashless Claims: Health insurers must honor pre-authorized cashless claims unless there is clear evidence of fraud or misrepresentation. This ensures that policyholders do not face unexpected denials for approved treatments.

• Disallowing Arbitrary Exclusions: The IRDAI mandates insurers to only exclude treatments for valid reasons and not arbitrarily deny claims. Insurers are required to provide a clear rationale for excluding certain treatments or conditions.

• Efficient Grievance Redressal: The circular also reinforces the requirement for insurers to have a well-functioning grievance redressal system, ensuring that policyholders have access to timely resolutions in the event of claim disputes.

3. Precautions Policyholders Should Exercise While Buying or Porting Policies

To avoid future claim rejections, policyholders should take the following precautions:

• Carefully Review Policy Documents: Before purchasing or porting a policy, it is crucial to thoroughly understand the policy's terms, including exclusions, sub-limits, and waiting periods. Many claims are rejected due to misunderstandings of what the policy covers.

• Disclose Pre-existing Conditions Honestly: Full disclosure of pre-existing conditions and medical history at the time of purchasing the policy is essential. Non-disclosure can lead to claim rejection later, as insurers have the right to refuse claims for undisclosed conditions.

• Understand the Waiting Period: Policies often have waiting periods for specific conditions or treatments, during which claims cannot be made. Understanding the waiting period for certain diseases or pre-existing conditions is critical to avoid denied claims.

• Ensure the Policy is Active: Keeping the policy active by paying premiums on time ensures continuous coverage. Lapsed policies are one of the most common reasons for rejection.

• Porting Policies with Attention: When porting (switching) health insurance from one insurer to another, ensure that the new insurer offers portability of benefits such as no-claim bonus and credit for waiting periods. Policyholders should initiate the porting process well in advance to avoid any gap in coverage.

4. Rights of the Claimant in Case of Unjust Claim Denial

If a claim is denied unjustly, policyholders have several rights, as outlined in the IRDAI regulations:

• Request for Reconsideration: Policyholders can request the insurer to reconsider their decision by providing additional documentation or clarification.

• Grievance Redressal: Insurers are required to have a grievance redressal system in place. Policyholders can approach the insurer’s grievance cell, and insurers must respond within 14 days.

• Approaching the Insurance Ombudsman: If the issue is not resolved satisfactorily, policyholders can approach the Insurance Ombudsman. The Ombudsman deals with disputes up to ₹50 lakh and provides a free and unbiased resolution process.

• Filing a Complaint with IRDAI: In case of persistent issues, policyholders can escalate their complaints to IRDAI through the Bima Bharosa. The regulator ensures that policyholders' complaints are addressed swiftly and fairly.

5. How Bima Samadhan Can Help in Case of Unjust Claim Denial

Bima Samadhan is a specialized grievance resolution platform that helps policyholders in dealing with insurance-related disputes. If a policyholder faces an unjust claim denial, Bima Samadhan can provide the following services:

• Expert Guidance: Bima Samadhan offers expert advice and support to help policyholders navigate the claims process and understand the reasons for denial.

• Legal Assistance: In cases of complex or persistent disputes, Bima Samadhan can offer legal support and help policyholders file complaints with the Insurance Ombudsman or consumer courts.

• Continuous Follow-up: Bima Samadhan actively follows up with insurers on behalf of the policyholder to ensure timely resolution of grievances.

Conclusion

Health insurance claim rejections can be mitigated by understanding the common causes, following regulatory guidelines, and taking the necessary precautions. With IRDAI's recent circulars strengthening consumer protections, policyholders can rest assured that their interests are safeguarded. Services like Bima Samadhan provide an additional layer of support, helping policyholders resolve disputes and receive the financial protection they are entitled to.

By being proactive and informed, policyholders can avoid the pitfalls of claim rejections and ensure smoother health insurance experiences.